Investment activity slowed somewhat in the third quarter 2011 after a surge in the first half of the year. Per Real Capital Analytics, transaction volume remains well ahead of the pace of last year, and for the year-to-date through August overall transaction volume is up 86% and transaction count is up 85% from the same period of 2010.    Sales volume of retail properties continues to show the highest increase, up over 200% compared to the same 2010 period. Major markets such as New York, San Francisco, and Chicago have recorded much higher transaction volumes than the nation overall. Interest should remain relatively high in the real estate asset class given attractive overall yield and risk comparisons to long term treasury rates and a volatile stock market. Lenders have tightened spreads recently on certain product types, while rates on an overall basis remain at historic lows.

 

According to CBRE Econometric Advisors, vacancy rates during the third quarter for the major property sectors remain mixed as outlined below:

 

Multifamily – As of September 30, 2011, the national vacancy rate for multifamily properties was 5.1%, down 30 basis points from the prior quarter. Landlords continue to get significant rent increases upon lease renewal in most major cities, with the highest rent growth in first tier cities such as Seattle and New York.

 

Retail – The national retail vacancy level remained flat during the third quarter at 13.2%. Stubbornly high gas prices, weak job growth, and overall economic uncertainty will likely continue to limit consumer spending and retail expansions for the foreseeable future.

 

Office –As of September 30, 2011, the national office vacancy level was 16.2%, unchanged from the prior quarter. Vacancy has fallen modestly but consistently in the past year. Limited job growth will continue to keep new development under control.

 

Industrial – The national industrial vacancy level at September 30, 2011 was 13.7%, down 20 basis points from the prior quarter. This report represents the fourth consecutive decline in vacancy as most major markets continue to show improvement.